Payroll Taxes Going Up

As people take a look at their paychecks this week, they may be in for a surprise.

The amount of money they thought they were bringing home is about to be a little less.

The Social Security Payroll Tax went up from 4.2 percent to 6.2 on January 1. Some families say the added costs means they'll be cutting back on family vacations and even bags of groceries.

For instance, workers making about $50,000 a year can expect to pay about $1,000 a year more in taxes or earn about $20 less a week. a

"If you're looking at $1,000 less in disposable income for the year that means you may not be putting as much into the college education fund for your 3-year-old," says Bruce Hagan, a certified financial planner.

As for the Neuens and millions of other families just like them, it may mean taking a more frugal approach.

"We just got back from North Carolina to see the grandparents so we will probably ask them to come see us a little bit more, but little things like that."

The payroll tax holiday was done in 2010 to stimulate a struggling economy. It was suppose to last just one year, but it was extended through 2012.

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